The S&P 500 and the Nasdaq declined on Tuesday as disappointing earnings from Pfizer and declines in megacap technology names added to jitters ahead of inflation data this week that could spark bets on quicker interest rate hikes.
Pfizer Inc fell 5.3% after the drugmaker’s full-year sales forecast for its COVID-19 vaccine and antiviral pills fell short of Wall Street estimates.
Facebook-owner Meta Platforms fell 1.4% after billionaire investor Peter Thiel decided to step down from the company’s board. The stock is down for a fourth session after its bleak forecast wiped out billions of dollars in market value last week.
Other high-growth stocks like Google-owner Alphabet Inc and Amazon.com Inc fell 1% each, while big banks like Bank of America Corp and JPMorgan Chase & Co jumped 2.5% each.
“We’ve got a rising interest rate environment which we haven’t seen since 2018 and there are a lot of investors in high growth names that continue to see weakness,” said Dennis Dick, a trader at Bright Trading LLC in Las Vegas.
“You’re going to see money rotate to lower multiple names and more value-oriented market.”
Seven of the eleven major S&P 500 sectors declined, with energy leading the fall.
At 10:13 a.m. ET, the Dow Jones Industrial Average was up 76.92 points, or 0.22%, at 35,168.05, the S&P 500 was down 10.23 points, or 0.23%, at 4,473.64, and the Nasdaq Composite was down 62.12 points, or 0.44%, at 13,953.55.
U.S. stocks have had a rough start to the year, with concerns around aggressive policy tightening by the U.S. Federal Reserve, geopolitical tensions in Ukraine and a mixed bag of results from Big Tech names weighing on the major indexes.
All eyes are on the U.S. consumer prices data, set to be released on Thursday, after a strong U.S. labor data last week put extra focus on the Fed’s plans to hike rates to fight inflationary pressures.
Consumer prices in January are forecast at a four-decade high at 7.3% – in the lead up to the Fed’s March meeting.
Peloton Interactive Inc gained 11.2% despite slashing its revenue forecast as the exercise bike maker said it would replace its chief executive officer and cut jobs in a bid to revive sagging sales.
“Obviously there is still a potential that we could see a deal … that is why it is not getting as hit,” added Dick, referring to media reports that Peloton had attracted interest from potential buyers including Amazon and Nike Inc.
Nvidia Corp slipped 2.4% after SoftBank Group Corp shelved its blockbuster sale of Arm Ltd to the chipmaker in a deal valued at up to $80 billion, citing regulatory hurdles.
Coty Inc gained 4.7% after raising its earnings forecast for 2022.
Of the 281 companies in the S&P 500 that reported earnings as of Monday, 78.3% beat analysts’ profit expectations, compared with an average of 84% over the past four quarters, according to Refinitiv data.
Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.12-to-1 ratio on the Nasdaq.
The S&P index recorded 18 new 52-week highs and four new lows, while the Nasdaq recorded 33 new highs and 63 new lows.